Friday, December 15, 2017

Does It Matter If We Call Entrepreneurs Heroes?

First, a funny comic from Non Sequitur

Should society call
entrepreneurs heroes? Are they like heroes from mythology? Those may seem like
strange questions for an economist to ask. But they matter for several reasons.
Dwight Lee and Candace Allen argued that if we don't honor entrepreneurial accomplishments,
we won't get enough startups. Deirdre McCloskey says that economic growth only
took off around the year 1800 because the West began according dignity to
entrepreneurs. The work of entrepreneurs parallels the hero's adventure in
mythology. The idea has been gaining attention recently, being discussed in The Wall Street Journal while Jeffery
McMullen has called for scholars to once again take it seriously. Even Joseph
Campbell, the author of The Hero With a
Thousand Faces, one of the inspirations for Star Wars, called the
entrepreneur the real hero in American capitalistic society in a radio
interview (see appendix).

Cyril Morong was the first to examine the similarities
between entrepreneurs and mythological heroes.[i],[ii]
He compared entrepreneurship research to The
Hero With a Thousand Faces to see if the activities of entrepreneurs corresponded
to the hero's adventure. What is the hero's adventure? According to Campbell

"The standard
path of the mythological adventure of the hero is a magnification of the
formula represented in the rites of passage: separation-initiation-return,
which might be named the nuclear unit of the monomyth. A hero ventures forth
from the world of common day into a region of supernatural wonder; fabulous
forces are there encountered and a decisive victory is won; the hero comes back
from this mysterious adventure with the power to bestow boons on his fellow
man."

How is this similar to
the entrepreneur's adventure?

The hero's journey begins with a call to adventure. He or
she is awakened by some herald which touches his or her unconscious world and
creative destiny. The entrepreneur, too, is "called" to the
adventure. By chance, he or she discovers a previously unknown product or way
to make a profit. The lucky discovery cannot be planned and is itself the
herald of the adventure. Israel Kirzner sees successful entrepreneurship as
result of a lucky discovery of a new opportunity for economic profit, but it is
luck that was due to alertness while leading a life of purposeful action.[iii]

The entrepreneur must step out of the ordinary way of
producing and into his or her imagination about the way things could be to
discover the previously undreamt of technique or product. The "fabulous
forces" might be applying the assembly line technique or interchangeable
parts to producing automobiles or building microcomputers in a garage. The
mysterious adventure is the time spent tinkering in research and development.
But once those techniques are discovered or developed, the entrepreneur now has
the power to bestow this boon on the rest of humankind.

Heroes and entrepreneurs both bring change. Campbell
refers to the constant change in the universe as "The Cosmogonic
Cycle" which "unrolls the great vision of the creation and destruction
of the world which is vouchsafed as revelation to the successful hero."
This is similar to Joseph Schumpeter's theory of entrepreneurship called
“creative destruction.” A successful entrepreneur simultaneously destroys and
creates a new world, or at least a new way of life. Henry Ford, for example,
destroyed the horse and buggy age while creating the age of the automobile. The
hero also finds that the world "suffers from a symbolical deficiency"
and "appears on the scene in various forms according to the changing needs
of the race." The changing needs and the deficiency correspond to the
changing market conditions or the changing desires for products. The
entrepreneur is the first person to perceive the changing needs.

Candace Allen and Dwight Lee say that "society needs
heroes" and that "entrepreneurs are heroes in every sense." Yet
they are not often see as heroes-in fact the opposite seems to be true even
though they are indispensable to economic progress. One problem is that
economists have not generally promoted entrepreneurs as being important. They
acknowledge that creative destruction was "the hallmark of
entrepreneurship" without mentioning the parallel to Campbell.
Entrepreneurs are motivated not just by money but also by "service to
something transcendental."Their views
can be summed up with:

“Just as the society that doesn't
venerate winners of races will produce fewer champion runners than the society
that does, the society that does not honor entrepreneurial accomplishment will
find fewer people of ability engaged in wealth creation than the society that
does.”[iv]

Dwight Lee and Candace Allen Smith covered similar ground
in a later article but also used Campbell, notably the
"separation-initiation-return" core of the monomyth (although they
still missed the creation destruction connection between Campbell and
Schumpeter). They suggest that entrepreneurs are seen negatively due to
political biases and the fact that their role in capitalism is poorly
understood.[v]
Calling them heroes might offset this.

Jeffery McMullen argues that seeing entrepreneurs as heroes
doesn't mean that they are hyper-individualistic lone rangers, cutoff from the
rest of society. They may receive some community support, but a new venture
still requires someone to act, to take the first step. This requires courage
due to uncertainty. They are heroic because they bear personal costs. McMullen
also bases his observations on the work of Campbell and Schumpeter. He calls on
scholars to end their hostility to calling entrepreneurs heroes. Otherwise, we
are all "vulnerable to the tyranny of cautious conformity while subjecting
our social systems to the constant threat of stagnation."[vi]

Charles Murnieks, Jeffery McMullen, and Melissa Cardon also
mention entrepreneurs being heroes (citing Campbell and Schumpeter). Using
surveys, they found that entrepreneurs experienced positive emotions (PE) when
they perceived that their self-identity as entrepreneurs matched that of
society or their environment. That is, if the entrepreneurs saw themselves as
risk-takers who enhance social welfare, and if the entrepreneurs thought that
society saw them that way as well, positive emotions were experienced.

Their empirical findings may support Allen and Lee's
contention that society should honor entrepreneurial accomplishments:

"challenging environments are part of
what makes a hero’s actions valiant. In a similar manner, we contend that
dynamic environments may play a key role in framing an entrepreneur’s actions
as courageous or innovative, because the individual is seen to act in the face
of uncertainty and turbulence. Stakeholders (such as mentors, family members,
or investors) who advise entrepreneurs should know and accentuate this point.
By providing reaffirming feedback in dynamic and challenging environments,
these stakeholders can elevate the PE experienced by the entrepreneur and
motivate them to continue on their journey. In essence, this strategy can help
separate the generation of PE from the success of the venture in some cases."[vii]

The "reaffirming
feedback" is a way to honor the entrepreneur which motivates them to
"continue on their journey."

The idea that entrepreneurs might be heroes is now
starting to reach the popular media. Barbara Haislip reported on how
storytelling, especially about the founders, can be a marketing tool for
businesses. She interviewed Angela Randolph of Babson College who said “Stories
about founders and new innovations are often in the form of a myth and follow
the hero’s journey.” Randolph then described the hero's journey as outlined in
Campbell. Telling the founding story about "the hero’s call to
action...pulls the audience in" if they can trigger "strong
emotions."[viii]

This question may be relevant now since entrepreneurship
may be in decline. Jeffrey Sparshott reported that “the share of private firms
less than a year old has dropped from more than 12 percent during much of the
1980s to only about 8 percent since 2010. In 2014, the most recent year of
data, the startup rate was the second-lowest on record, after 2010.”[ix]
Honoring and respecting the work of entrepreneurs might be a way to reverse
this trend.[x]

Also, historically, it may have only been when
entrepreneurs became respected that economic growth took off. Deirdre McCloskey
argues that what made the world so wealthy today, when average world income in
1800 was just $1 to $5 per day (adjusted for inflation) was a change in ideas:

"...in
Holland and then in England. The revolutions and reformations of Europe, 1517
to 1789, gave voice to ordinary people outside the bishops and aristocrats.
Europeans and then others came to admire entrepreneurs..."

It was a "Middle-Class
Deal" that gave entrepreneurs dignity and liberty to seek profit and
generate social welfare. This led to a flurry of inventions, innovations and
new institutions that made our modern world and therefore "the ordinary
people, and especially the very poor, were made much, much better off."
She even says "People had to start liking "creative destruction...""[xi]

In fact, one of her books is titled Bourgeois Dignity: Why Economics Can’t Explain the Modern World.
McCloskey writes

"that
the modern world was made not by the usual material causes, such as coal or
thrift or capital or exports or imperialism or good property rights or even
good science, all of which have been widespread in other cultures and at other
times."[xii]

McCloskey even credits "the
Kirznerian entrepreneur [for allowing her] to make progress on the puzzle of
economic growth." What is entrepreneurship? It is an "unhirable
factor" or "alertness" and "can't be something that can be
provided routinely, such as the services of banking or management. It must be
creative."[xiii]
Creativity comes from stepping outside the normal way of doing things,
"jumping over the edge and moving into the adventure" (see the
Campbell interview in the appendix). So the entrepreneur is just like the hero
in mythology.[xiv]

Appendix

Tape #1901: "Call of the Hero" with
Joseph Campbell interviewed by Michael Toms. New Dimensions Foundation audio
tape from a live interview on SanFrancisco's radio station KQED. The following exchange was part of a
discussion of the question of: What is creativity?

Toms: In a sense it's the going for, the jumping
over the edge and moving into the adventure that really catalyzes the
creativity, isn't it?

Campbell: Well, my wife is a dancer. She has had
dance companies for many, many years. I don't know whether I should talk about
this. But when the young people are really adventuring, it's amazing what guts
they have and what meager lives they can be living, and yet the richness of the
action in the studio. Then, you are going to have a concert season. They all
have to join a union. And as soon as they join a union, their character changes. (emphasis added, but Campbell changed the
tone of his voice) There are rules of how many hours a day you can rehearse.
There are certain rules of how many weeks of rehearsal you can have. They bring
this down like a sledgehammer on the whole thing. There are two mentalities.
There's the mentality of security, of money. And there's the mentality of open
risk.

Toms: In other societies we can look and see that
there are those that honor elders. In our society it seems much like the elders
are part of the main stream and there is a continual kind of wanting to turn
away from what the elders have to say, the way it is, the way to do it. The
union example is a typical one, where the authority, institution, namely the
union comes in and says this is the way it's done. And then one has to fall into
line or one has to find something else to do.

Campbell: That's right.

Toms: And it's like treating this dichotomy
between elders and the sons and daughters of the elders. How do you see that in
relationship to other cultures?

Campbell: This comes to the conflict of the art,
the creative art and economic security. I don't think I have seen it in other
cultures. The artist doesn't have to buck against quite the odds that he has to
buck against today.

Toms: The artist is honored in other cultures.

Campbell: He is honored and quickly honored. But
you might hit it off, something that really strikes the need and requirements
of the day. Then you've given your gift early. But basically it is a real risk.
I think that is so in any adventure, even in business, the man who has the idea
of a new kind of gift (emphasis
added) to society and he is willing to risk it (this is exactly what George
Gilder says in chapter three, "The Returns of Giving" in his book Wealth and Poverty). Then the workers
come in and claim they are the ones that did it. Then he (the entrepreneur)
can't afford to perform his performance. It's a grotesque conflict, I think
between the security and the creativity ideas. The entrepreneur is a creator;
he's running a risk.

Toms: Maybe in American capitalistic society the
entrepreneur is the creative hero in some sense.

Campbell:
Oh, I think he is, I mean the real one. Most people go into economic activities
not for risk but for security. You see what I mean. And the elder psychology
tends to take over.

This discussion ended and after a short break a
new topic was discussed.

[i]
Cyril Morong, "The Creative-Destroyers: Are Entrepreneurs Mythological
Heroes?" (Presented at the annual meetings of the Western Economic
Association, July), 1992, available at:
http://cyrilmorong.com/CreativeDestroyers.pdf

Cyril Morong, "The Calling of the
Entrepreneur," The New Leaders: The
Business Bulletin for Transformative Leadership, November/December 1992, p.
4, available at:http://cyrilmorong.com/ENTREPRENEURshort.pdf

[ii] Wyn Wachhorst in Thomas
Alva Edison: An American Myth (Cambridge, MA: MIT Press, 1981), pp.74-86,
uses Joseph Campbell's book The Hero With
a Thousand Faces to analyze part of Edison's early life, although Wachhorst
suggests that Edison might have been more trickster than hero. Wachhorst quotes
David McClelland from The Achieving
Society with: "Interestingly, David McClelland found that Hermes, the
trickster of the Greek pantheon, is the mythological type which best reflects
the "achievement personality [of entrepreneurs]."" Morong
(1992a) also mentions tricksters. The word entrepreneur does not appear in the
index of the Edison book. So Wachhorst probably did not look at any research on
entrepreneurs in general. He did not mention Schumpeter and creative
destruction, either. Wachhorst often compares Edison to Prometheus, suggesting
that using electricity is like stealing fire.

From personal
correspondence with Israel Kirzner he writes "I should point out in my own
treatment of the entrepreneur, he is not seen as a "hero." Moreover,
in my own treatment pure luck is not seen as entrepreneurial. (but as the act
of deliberately putting oneself into a situation which one hopes will
prove lucky is entrepreneurial)." It is my contention that the best
way for a person to put themselves into a situation in which they will be lucky
is for them to follow Campbell's advice that is based on his analysis of the
hero's adventure. This is to follow your bliss, to listen to the wisdom of your
heart and do what you love, not what the social system would have you do. If
you follow your bliss, you are a hero. I believe that the most successful
entrepreneurs follow their bliss and are therefore heroes. Jeffery McMullen
(cited below) also mentions that entrepreneurs follow their bliss.

Joseph Schumpeter, The
Theory of Economic Development (New Brunswick, NJ:Transaction Books, 1983),
p. 923 lists three classes of motives for entrepreneurship: the will to found
private kingdom, the will to conquer, and the joy of creating. The first,
although seemingly only greedy, ranges, however, from "spiritual ambition
down to mere snobbery." The second was like a sporting event, with money
used to keep score, and not an end in itself. The entrepreneur of the third
class of motives is in it for the sake of "exercising one's energy and ingenuity"
and for the delight in venturing. All three classes of motives are
anti-hedonistic, with the third being the most so. This certainly makes it
plausible to see the entrepreneur as someone who follows his or her bliss.

[x] Allen and Lee (1996) mention that "during the
1980s almost 90 percent of all business characters on television were portrayed
as corrupt." It does not seem like there are many movies or TV programs
even now that show entrepreneurs in a positive light.

[xi] Deirdre McCloskey, "Liberty and Dignity Explain
the Modern World": An Essay Based on Bourgeois
Dignity: Why Economics Can't Explain the Modern World, November 2011,
available at: http://www.deirdremccloskey.com/articles/bd/briefBD.php.

[xiii] Deirdre McCloskey, "A Kirznerian Economic
History of the Modern World,"June
17, 2011, available at: http://www.deirdremccloskey.com/editorials/kirzner.php

[xiv] McCloskey also writes that the growing freedom and
increasing respect for entrepreneurs "created more and more opportunities
for Kirznerian alertness." Furthermore "Austrian discovery and
creativity depends also on the other virtues, in particular on Courage and
Hope" and "A new rhetorical environment in the eighteenth century
encouraged (literally: "gave courage" to the hope of) entrepreneurs."
She does, however, see a weakness in that Kirzner does not consider the
audience of the entrepreneur, the customers and the rhetoric they use.